Agenda item

66.1     The Committee considered a report introduced by Russell Wood and David O’Hara who drew the Committees attention to the following points:

1)      The PIRC benchmarking showed the LGPS as a whole performed well, the Fund was just below the average performance for Q4 and 1 year returns and a slightly higher return  looking at the 3 year 3 year figures.

2)      The Joint ACCESS committee have set the business plan and budget, there is a £155k contribution per council.

3)      The Fund has successfully maintained its Stewardship status (as of 21 February) the Fund will try to report in May going this year depending on resources so the report is being drafted in a time period closer to the data set it is reporting on.

4)      The first PRI report was submitted this year, the Fund is over the median score for all areas and at least 4 stars for all items, the report will be submitted again in June/July. The Fund is well above the median and this is an achievement.

5)      The Competition and Markets Authority’s (CMA) Investment Consultancy and Fiduciary Management Market Investigation Order 2019 has an annual requirement for all LGPS funds to submit a compliance statement, the Fund submitted this on 4 January 2024. .

6)      Due to the timing of the November meeting the usual Quarterly Performance Report for Q3 2023 was partially incomplete, the full report has now been completed and is attached as Appendix 2 of the report.

7)      The Quarterly report for December has also not been completed in full in time for the publication for papers. Isio have provided the report as complete as possible attached as Appendix 3 of the report with the detail pages for Ruffer, UBS infrastructure, Pantheon, IFM to follow once complete.

8)      The quarterly performance was reflected a 4.3% positive absolute return and the Fund also outperformed its benchmark, there was strong performance across all markets, equity and bond markets are up significantly but some uncertainty remains regarding inflation. 

9)      The active impact public equity mandates have continued to struggle relative to their benchmarks over the last 12 months. Private equity mandates have delivered very strong performance over the 3 and 5 year periods, however the performance has been largely negative over the last 12 months.

10)    Infrastructure has mostly performed strongly over the last quarter except for UBS and Pantheon. Of the managers that have been in place for the longer term, UBS infrastructure has most significantly underperformed its benchmark. This is primarily driven by the disappointing performance of Archmore Fund I.

11)    There was outperformance in equity mandates, private equity underperformed, reflecting a period of over performance which is now starting to cool as valuations catch up.

12)    Newton’s improved performance was noted, however Ruffer have a more cautious approach which was reflected in their performance, property markets continued to struggle however Schroders have advised that they think this is flattening. Ruffer has outperformed over 5 years. Newton’s long term performance is slightly under the benchmark but broadly inline. The medium term performance has been lack lustre so there are some concerns over this as an asset class and whether sufficient risk is being taken to ensure a good return and this will be kept under review.

13)    The Chair of the Pension Committee and Officers met with Ruffer and drew some comfort about approach, the high conviction rates proved prudent during the pandemic.

14)    Wellington; the lead portfolio manager has stepped down and the fund was downgraded to amber as result, this will be kept under review with regular meetings to ensure comfort levels. 

15)    M&G Alpha opportunities; this is one of the best performing funds in sector with strong ESG credentials and now has a sustainable version of the fund which is positive. Having reviewed the proposition, restraints are the size of the fund which is currently too small to invest in, along with  a limitation created by the investments which get screened out reducing the investable universe (these are screened out due to lack of data available rather than being bad investments/not meeting ESG requirements).

16)    Returns are driven by having the correct asset allocation and excluding asset classes due to a lack of data is challenging from a return perspective. ISIO are exploring this with M&G as this is a significant consideration for the Committee in assessing the sustainable version of the Fund.

17)    ATLAS; performing well, 60% was owned by global managers, now acquired by Blackrock however not a concern at this point.

18)    The Committee noted that the Fund is slightly overweight in private equity against the agreed strategic allocation and underweight in private credit, work is ongoing looking at moving into private credit, looking at what this will comprise of and allocating managers, ACCESS are not in a position to do this at this stage, ISIO will bring the proposal back to a future meeting and the possible managers to consider.

66.2     The Committee REVOLVED to note the investment report.